According to the update, most motorists will be charged an extra £10 to £30 each year – adding to the ongoing cost of living crisis. The VED increase is in line with the lates Retail Price Index (RPI).
The changes have meant substantial increases for drivers, especially those buying brand new cars – as they could be charged an extra £120 for first its first year on the road – known as a showroom tax.
Here, the RAC looks at how the updated VED will impact you going forward – no matter if it relates to a new purchase or your current vehicle.
What is a showroom tax?
After buying a new car, owners are hit with a first year tax rate – a showroom tax. The payment is based on the emissions produced by the vehicle. After this first year, owners will then have to pay the standard tax rate.
According to the new VED rates, after buying one of the latest petrol or diesel cars with carbon emissions up to 150g/km, drivers will be paying between £5 and £10 more than they would have a year ago.
Also, if your new diesel car fails to meet the Real Driving Emissions 2 (RDE2) standards for nitrogen oxide emissions, there is a further charge, which can be found on the Government’s car tax website.
Following April 1, the biggest increase in new tax payments will impact the most polluting vehicles.
| Emissions (g/km) C02 | Diesel (R2E2) compliant and petrol cost | Increase | Alternative car cost | Increase | Other diesel cost | Increase |
|---|---|---|---|---|---|---|
| No emissions | £0 | £0 | £0 | £0 | £0 | £0 |
| 1-50 | £10 | £0 | £0 | £0 | £25 | £0 |
| 51-75 | £25 | £0 | £15 | £0 | £120 | £5 |
| 76-90 | £120 | £5 | £110 | £5 | £150 | £10 |
| 91-100 | £150 | £10 | £140 | £10 | £170 | £10 |
| 101-110 | £170 | £10 | £160 | £10 | £190 | £10 |
| 111-130 | £190 | £10 | £180 | £10 | £230 | £10 |
| 131-150 | £230 | £10 | £220 | £10 | £585 | £30 |
| 151- 170 | £585 | £30 | £575 | £30 | £945 | £50 |
| 171-190 | £945 | £50 | £935 | £50 | £1,420 | £75 |
| 191-225 | £1,420 | £75 | £1,410 | £75 | £2,015 | £105 |
| 226-255 | £2,015 | £105 | £2,005 | £105 | £2,365 | £120 |
| 255+ | £2,365 | £120 | £2,355 | £120 | £2,365 | £120 |
Tax rate for vehicles registered from April 1 2017 to March 21 2022
If you have a car that was first registered between April 1 2017 and March 21 2022, you will see a tax hike as a result of the latest announcement.
Price rises for petrol and diesel cars will see an increase from £150 to £155 for the annual payment – and for alternative fuel vehicles, the price will increase from £140 to £145. This includes hybrids and plug-in hybrid vehicles.
The VED rate for zero emission vehicles will remain free of charge.
| Vehicle type | Tax for cars costing less than £40,000 | Increase | Tax for cars costing more than £40,000 | Increase |
|---|---|---|---|---|
| Petrol/diesel | £165 | £10 | £520 | £30 |
| Hybrid or alternative fuel | £155 | £10 | £510 | £30 |
| Electric | £0 | £0 | £0 | £0 |
- RAC Fuel Watch - latest petrol and diesel prices
- What affects the price of fuel?
- RAC reaction to Spring Statement announcement that fuel duty will be cut
Tax rate for owners of cars registered from March 1 2001 to April 1 2017
For drivers who need to register a vehicle that was first registered March 1 2001 to April 1 2017, the new tax rates will impact drivers depending on their C02 emissions.
With regards to the new VED payments – costs will increase anywhere from £5 to £30 a year.
| VED rate | C02 emissions (g/km) | Diesel/petrol rate | Increase | Alternative fuel rate | Increase |
|---|---|---|---|---|---|
| A | Up to 100 | £0 | £0 | £0 | £0 |
| B | 101-110 | £20 | £0 | £10 | £0 |
| C | 111-120 | £30 | £0 | £20 | £0 |
| D | 121-130 | £135 | £5 | £125 | £5 |
| E | 131-140 | £165 | £10 | £155 | £10 |
| F | 141-150 | £180 | £10 | £170 | £10 |
| G | 151-165 | £220 | £10 | £210 | £10 |
| H | 166-175 | £265 | £15 | £255 | £15 |
| I | 176-185 | £290 | £15 | £280 | £15 |
| J | 186-200 | £330 | £15 | £320 | £15 |
| K | 201-225 | £360 | £20 | £350 | £20 |
| L | 226-255 | £615 | £30 | £605 | £30 |
| M | 255+ | £630 | £30 | £620 | £30 |
Car tax for cars registered before March 1 2001
For UK car owners, who drive a car that is more than 21 years old, there will also be a tax increase.
In line with the updated VED rates, payments will be split between engines that are either larger or smaller than 1.55 litres (1549cc).
For the vehicles larger than 1.55 litres, payments will increase from £280 to £295 – and for smaller engined cars, payments will rise from £170 to £180.
However, if you own a vehicle that was first registered before April 1 1982, you will not have to pay any car tax. If this applies to your vehicle, then you will need to contact the DVLA for vehicle tax exemption.
Once your logbook has been updated to reflect this, the exemption is in place.
Complete peace of mind for less
• Cheaper than AA Price Guarantee^
• We get to most breakdowns in 60 mins or less
• Our patrols fix 4/5 breakdowns on the spot
